FAQs: Gender pay gap reporting

Despite the deadline of 5 April (or 30 March for the public sector) fast approaching, many businesses have not yet published their gender pay gap data.

We set out some of the trickier questions we have been asked about reporting your gender pay gap.

1 Some of our staff are employed on more than one contract. How do we report their data?

In most cases you should add up all of the pay paid to that employee under all of their contracts with you, rather than reporting separately in relation to each contract.

The Regulations don’t deal specifically with the issue of more than one contract, but do make clear that employers have to work out the hourly rate of pay for a “relevant employee” by adding up all relevant pay paid to them during the relevant pay period and then applying the appropriate calculation. In our view this means all relevant pay – irrespective of whether it is under more than one contract.

The Regulations set out a six-step process for calculating hourly pay. Step one is to “identify all amounts of ordinary pay and bonus pay paid to the employee during the relevant pay period”. This does not distinguish between pay paid under separate contracts and it therefore appears that you don’t have to report separately.

If the different contracts offer different pay rates however, (which in turn are reflected in different quartiles), then adding all pay may skew your results. Gender pay reporting is required to show the discrepancy between men and women’s pay, and it may be sensible to do separate calculations for the same employee in these circumstances.

2 How do we calculate the hourly rate for employees engaged on term-time only contracts but paid over 12 months?

Again, the Regulations do not set out what to do in these circumstances. Employers can calculate the hourly rate over a period of 12 weeks where normal working hours differ from week to week. This method will not give you an accurate hourly rate however because of the number of holidays term-time workers take (both paid and unpaid).

The Regulations provide an alternative method of calculation for instances where it isn’t appropriate to average pay over 12 weeks. Employers can use a number which “fairly represents” the number of working hours in a week as compared to other employees in comparable employment.

An accurate hourly rate can be calculated using the following three-step formula:

1 Add the number of weeks actually worked in the year plus the number of weeks’ paid holiday to give the number of weeks worked per year.

2 To calculate weekly pay - divide the pro-rated salary by the number of weeks worked per year.

3 To calculate hourly pay - divide the weekly pay by the number of hours actually worked each week.

Example: For an individual earning £20,600 per annum (pro-rated) working 37 hours per week for 39 weeks and entitled to 5.6 weeks holiday:

1 39 weeks worked per year plus 5.6 weeks holiday = 44.6 weeks

2 £20,600 divided by 44.6 = £461.88 per week

3 461.88 divided by 37 hours worked per week = £12.48 per hour

We recommend that you explain how you have calculated the hourly rate of pay for term-time staff in your narrative.

3 Do we need to include data about workers engaged under zero-hours contracts?

You may have to, even if they were not working on the snapshot date. As we explained in the answer to question two above, if a worker’s normal working hours differ from week to week, their hourly rate is assessed by providing an average over the previous 12 weeks before the end of the pay reference period.

When working out the 12 week average, remember to ignore any weeks in which the worker did not work at all.

4 Should we provide a narrative to explain our data?

You don’t have to provide a narrative if you don’t want to. There may however be benefits to doing so. A short narrative could be used to provide context and set out the steps your organisation is taking to narrow the gap, or at least to explain why there is a gap.

The starting point is to consider how your figures compare to the national average (a mean gender pay gap of 18.1% for all employees) and, separately, those in your industry if that information is available.

Remember, though, your figures and any narrative will act as a baseline for future years and can be used to show improvements.

Many of our clients are opting for transparency and providing narratives. Being open about your pay gap, why it has arisen and sharing future plans will provide a positive message even if the data itself is somewhat disappointing.

5 We are not yet ready to report our data. Are we okay to leave it until the deadline?

The Government expects around 9,000 organisations to report their gender data gaps. As at mid-February, only 1,000 have done so.

If many organisations leave reporting until the last minute (30 March 2018 for public sector employers and 4 April for private sector employers), it’s possible that the site will crash. We therefore recommend that you report as soon as you have compiled your data. In addition, you must register before you can activate your account and submit your data, and that process can take up to a week.

The Government has recently indicated that it intends to publish three separate lists setting out the names of employers who have reported; those who have indicated that they are on track by registering on the Government website; and those who have taken no action.

To avoid being “named and shamed” as an employer who has not taken any action, we recommend that you register as soon as possible – even if you are not yet ready to publish. You can do this online but must wait to receive an identification number in the post before you can activate your account unless you have already received a letter from the Government Equality Office which provides this information.

6 Are there any penalties that can be imposed if we don’t supply data? What if the data we provide is inaccurate?

At the moment the position is not clear. The Government has said that a “failure to comply … constitutes an ‘unlawful act’ … which empowers the Equality and Human Rights Commission (EHRC) to take enforcement action”. There are currently no enforcement provisions in the legislation. They did however launch a consultation on the issue which ended recently.

The EHRC has said it will use its enforcement powers ‘firmly, promptly and effectively’ and will also publish details of enforcement action taken. If it can use its existing powers under the Equality Act 2010, it may be able to impose unlimited fines, but only in exceptional cases (and only where other steps have failed). It has said that it will provide help and assistance to encourage organisations that have not published their data to do, and will generally give them around 2 months to do this. If this fails, they can launch a formal investigation and issue legal notices. Taking enforcement action in the courts will be a “last resort”.

The EHRC has said that it may also challenge the accuracy of information provided and take action against employers if it’s “necessary, proportionate and feasible to do so”. This may be of more concern to employers who publish data that is “statistically unlikely.”

Given the current press interest in equal pay and gender diversity generally, there is also a risk of reputational damage if no, or inaccurate, data is published.

7 We are part of a group of companies. Do we report group figures or is each subsidiary in the group required to report separately?

You are required to report separately for each subsidiary that employs 250 or more employees at the snapshot date.

The rationale for this is that single-entity pay gap reporting is "more meaningful" than group-level reporting as a group's subsidiaries may operate across a wide range of sectors, and the Government wants senior leaders at each individual employer to take ownership of the issue in respect of their workforce.

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